Government spending
Government spending or
government expenditure consists of
government purchases, including
transfer payments, which can be financed by
seigniorage (the creation of money for government funding),
taxes, or government
borrowing. It is considered to be one of the major components of
gross domestic product.
John Maynard Keynes was one of the first
economists to advocate government
deficit spending as part of a
fiscal policy to cure an
economic contraction. In
Keynesian economics, increased government spending is thought to raise
aggregate demand and increase
consumption.
As of September 2004 the U.S.
Congressional Budget Office reported that
federal government spending for 2004 was projected to be $2,293 billion, or slightly less than 20% of the GDP. Of that, $159 billion was for net
interest, $486 billion for
defense, $492 billion for
Social Security, $473 billion for
Medicare and
Medicaid, $191 billion for various
welfare programs, $136 billion for "retirement and disability" benefits, and $64 billion was projected to be spent elsewhere.
* Congressional Budget Office. "CBO's Current Budget Projections". [
1].
November 24,
2004.
*
Government operations
